Does “tax & spend” lead Oregon cities to Detroit’s fate?

by Dave Berg

“Everything is funny, as long as it’s happening to somebody else” – Will Rogers

Oregon has been dominated by a “tax & spend” political philosophy for decades. This philosophy is premised upon a belief that you always increase tax revenue to grow our government. Proponents of this philosophy aren’t so much in favor of “good government” as much as a larger overall government presence. They believe in supporting the government’s influence across all sectors of life by continuously increasing both tax and fee revenue.

It’s not simply a philosophy which permeates the state level but also regional, county and municipal governments, all of which often duplicate each other in their programs. There is nothing wrong with good government that performs a vital role in society. Unfortunately, “tax and spend” promotes size over quality and all organizations (public and private) are often less efficient the larger they become. Eventually they implode when they can no longer be sustained given market forces or disruptive technology. It’s inevitable as changes exert pressures on organizations and they must adapt to survive.

Detroit is the perfect example of this in the public sector, accumulating bad decisions over decades, until the consequences forced the inevitable implosion of this municipal government. Municipalities, like very large corporations, can survive serious impediments to their viability but at some point the cumulative challenges just become too much. Detroit is now the prime example of where taxes and fees on the private sector could no longer sustain the cost burden of the public sector. It’s a very real example of how far “tax & spend” can drive municipal government as bad management decisions accumulate across multiple administrations.

Residents in Lake Oswego have had a unique perspective lately. LO is a unique city with an AAA bond rating and historical debt under $50 million. But the past decade has taught residents the real cost of “tax & spend” and how far down the political chain it had gone in Oregon. Our Mayor and council began proposing $400 million streetcars, purchased a $20 million building without voter approval, negotiated a $125 million deal on a water plant (no voter approval), and wasted millions on “visionary” projects that never came to fruition. There seemed to be no end to the next crisis or “visionary project” which were all veiled attempts to justify more “tax and spend”.

When questioned these elected officials would respond that “debt is the cheapest it’s ever been, so now is the time to spend” while they raised our taxes, fees, utility rates, and debt accordingly.  Many residents cringed at the “political spin”, realizing that it was prior conservative fiscal policies which had actually produced our exceptional debt rating.

The net result of their decisions was a tripling of municipal debt as of last year, with a total debt perhaps rising to eight times its historical level. It took a decade for Lake Oswego residents to realize what was going on with the proponents of “tax & spend”. In 2010 and 2012 they voted for fiscal responsibility after finally observing the debt load and the accompanying utility rates required to support it. Many often now ask themselves if LO was on the road to Detroit?

It’s important to tie the outcome of Detroit back to the core philosophy of “tax & spend” which was driving it and other municipalities to fiscal collapse. Citizens often do not realize that connection until the bills actually need to be paid and the reality comes into view. There is a cost for excessive debt, visionary projects, and “free services”.

I feel fortunate our little town of 37,000 may have taken the “off ramp” long before we reached Detroit, but how many other municipalities in Oregon are still on that road?  How many elected officials firmly believe in “tax & spend” and are now voting accordingly to commit their communities on the pathway to Detroit?

Dave Berg is a 22-year resident of Lake Oswego a board member of COLA LO, Chair of the Lake Oswego Budget Committee, and Co-Chair of the legislative Committee of the Clackamas County Republican Party.